DCIT 7(3), MUMBAI V. WINE SOCIETY OF INDIA LTD, MUMBAI

ITA 5532/MUM/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 3542 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-08-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 19-07-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 02-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O P MEENA
• Assessee Lawyers: BHUVANESHWARI SHANKARAR
• Keywords: Additional evidence

Judgement Text

2/- IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUM BAI , BEFORE SHRI RAJENDRA, A.M. AND SHRI RAMLAL NEGI, J. M. ./I.T.A. NO.5532/MUM/2014 , / ASSESSMENT YEAR: 2007-08 DCIT-7(3) ROOM NO.615, 6 TH FLOOR, AAYAKAR BHAVAN, MK ROAD MUMBAI-400 020. VS. M/S. WINE SOCIETY OF INDIA LIMITED 005, CNB SQUARE, SANGAM CINEMA COMPLEX, 127, ANDHERI KURLA ROAD ANDHERI (E) NAVI MUMBAI-400 059. PAN:AAACW 6673 N ( /APPELLANT ) ( / RESPONDENT ) RE VENUE BY: SHRI O.P. MEENA- DR ASS ESSEE BY: MISS BHUVANESHWARI SHANKAR-AR / DATE OF HEARING: 17.08.2016 / DATE OF PRONOUNCEMENT: 17.08.2016 ,1961 254(1) ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA, AM - CHALLENGING THE ORDER DATED 01/07/2014 OF THE CIT ( A)-13,MUMBAI THE ASSESSING OFFICER(AO) HAS FILED THE PRESENT APPEAL. ASSESSEE COMPANY, ENGAGED IN THE BUSINESS OF ORGANISING AND HOSTING WINE APPRECIATIO N EVENTS, WINE TASTING CLASSES AND TUTORED DINNERS ETC., FILED ITS RETURN OF INCOME ON 31/10/2007, DEC LARING LOSS OF RS. 47.73 LAKHS. THE AO COMPLETED THE ASSESSMENT, U NDER SECTION 143 (3) OF THE ACT, ON 30/12/2009/ DETERMINING THE INCOME OF THE A SSESSEE AT RS.12.38 LAKHS. 2. EFFECTIVE GROUND OF APPEAL IS ABOUT PARTLY ALLOWING THE EXPENDITURE CLAIMED BY THE ASSESSEE. DURING THE ASSESSMENT PROCEEDINGS, TH E AO FOUND THAT THE ASSESSEE HAD DECLARED INCOME BY WAY OF FEES RECEIVED OF RS.4 .56 LAKHS AND OTHER INCOME OF RS. 30,380/, THAT AGAINST THE SAID EARNED INCOME I T HAD CLAIMED EXPENDITURE OF RS. ITA NOS.5532/M/14-WINE SOC.OF INDIA 2 75.15 LAKHS UNDER THE HEAD ADMINISTRATIVE OF EXPENS ES. HE DIRECTED THE ASSESSEE TO SUBSTANTIATE THIS CLAIM. THE ASSESSEE FURNISHED COP IES OF SOME OF THE BILLS AND COPIES OF SOME OF THE LEDGERS. AS PER THE AO, IT WA S NOT ABLE TO CORRELATE THE EXPENSES INCURRED WITH NATURE OF THE BUSINESS. HE O BSERVED THAT IT HAD NOT GIVEN THE DETAILS OF EVENTS AND THE NAMES AND ADDRESSES OF TH E SPONSORS OF THE EVENTS, THAT THE FEES WERE RECEIVED FROM THE MEMBERS ONLY AND THE EX PENSES INCURRED WERE REQUIRED TO BE REIMBURSED BY THE MANUFACTURERS OF T HE WINES, THAT NO DETAILS WERE FILED IN THAT REGARD. CONSIDERING THE ABOVE FACTS T HE EXPENSES CLAIMED UNDER THE HEAD ADMINISTRATIVE EXPENSES WERE RESTRICTED TO 20% OF THE CLAIM MADE BY IT AND BALANCE CLAIM OF RS.60.12 LAKHS WAS DISALLOWED. 3. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE PRE FERRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY (FAA). BEFORE HER, THE AS SESSEE FURNISHED DETAILS OF EXPENSES WHICH WERE BUSINESS PROMOTION EXPENSES, PR OPORTIONAL EXPENSES, MATERIAL AND DESIGN EXPENSES, LEGAL AND PROFESSIONA L FEES AND LODGING AND BOARDING EXPENSES. AS THE EVIDENCES PRODUCED BY THE ASSESSEE WERE IN NATURE OF ADDITIONAL EVIDENCES, SHE REMANDED THE MATTER TO THE AO BY HER LETTER DATED 20.03.2012. EVEN AFTER MORE THAN TWO YEARS, THE AO DID NOT FILE REMA ND REPORT NOR DID HE ASK FOR EXTENSION OF TIME. THEREFORE,SHE GAVE FINAL OPPORTU NITY TO THE AO TO FILE THE REMAND REPORT VIDE HER LETTER DATED 13.06.2014. HOW EVER, TILL THE PASSING OF THE APPELLATE ORDER THE AO DID NOT FURNISH ANY REPORT. ITA NOS.5532/M/14-WINE SOC.OF INDIA 3 3.1 ON THE BASIS OF THE AVAILABLE MATERIAL, SHE HELD TH AT THE LODGING AND BOARDING EXPENSES INCLUDED ROOM TARIFF, TELEPHONE CHARGES, F OOD BILLS, LUXURY TAX, THAT MEMBERSHIP FEES HAD BEEN PAID FOR THE DIRECTORS, TH AT THE WINE TESTER HAD VISITED VARIOUS PLACES AND DELIVERED LECTURES. SHE ASKED TH E ASSESSEE AS TO WHETHER THERE WAS ANY CONTRACT ENTERED INTO BY THE ASSESSEE WITH THE DIRECTORS AND THEIR GUESTS AS PER WHICH IT WAS OBLIGED TO PUT THEIR FOOD, DRINKIN G, LODGING, BOARDING AND TRAVEL BILLS. THE ASSESSEE AGREED THAT THERE WAS NO SUCH A GREEMENT. IN ABSENCE OF THE AGREEMENT, THE FAA, HELD THAT THE EXPENDITURE INCUR RED BY THE ASSESSEE COULD NOT BE ALLOWED IN TOTO. WITH REGARD TO THE EXPENSES UND ER THE HEAD ADMINISTRATION, WEBSITE EXPENSES, STAFF WELFARE EXPENSES AND LUNCH EXPENSES, SHE NOTED THAT ASSESSEE HAD NOT BEEN ABLE TO GIVE SUPPORTING DOCUM ENTS. SHE HELD THAT THE EXPENDITURE COULD NOT BE ALLOWED IN ENTIRETY. FINAL LY, SHE HELD THAT 30% OF THE EXPENSES WERE TO BE DISALLOWED UNDER VARIOUS HEADS I.E. BUSINESS PROMOTION EXPENSES, LODGING AND BOARDING EXPENSES. AS A RESUL T, SHE ALLOWED A RELIEF OF RS. 37.57 LAKHS. 4. DURING THE COURSE OF HEARING BEFORE US, THE DEPARTM ENTAL REPRESENTATIVE(DR) ARGUED THAT THE ASSESSEE HAD NOT FILED DETAILS ABOU T THE EXPENDITURE INCURRED, THAT WITHOUT SUBSTANTIATION NO EXPENDITURE COULD BE ALLO WED. IN SHORT, HE SUPPORTED THE ORDER OF THE AO. THE AUTHORISED REPRESENTATIVE(AR) CONTENDED THAT THE ASSESSEE ITA NOS.5532/M/14-WINE SOC.OF INDIA 4 HAD FILED NECESSARY DETAILS BEFORE THE FAA, THAT TH IS WAS THE FIRST YEAR OF THE BUSINESS OF THE ASSESSEE, THAT FAA HAD VERIFIED THE DETAILS FILED BY THE ASSESSEE. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE ASSESSEE HAD FILED ADDITIO NAL EVIDENCES DURING THE APPELLATE PROCEEDINGS, THAT THE FAA HAD FORWARDED T HE SAME TO THE AO FOR COMMENTS, THAT HE DID NOT FURNISHED THE REMAND REPO RT EVEN AFTER TWO YEARS AND EVEN AFTER GETTING THE LAST OPPORTUNITY TO COMMENT ON THE ADDITIONAL EVIDENCES, THAT THE FAA MADE THE NECESSARY ENQUIRIES AND RESTRICTED THE DISALLOWANCE MADE BY THE AO. THE FAA HAS GOT CO-TERMINOUS POWER WITH THE AO. WE ARE UNABLE TO UNDERSTAND AS TO WHAT PREVENTED THE AO TO FILE REMA ND REPORT. ON THE ONE HAND,IN SPITE OF GETTING A PERIOD OF MORE THAN TWO YEARS,TH E AO DID NOT COMMENT UPON THE DOCUMENTARY EVIDENCES FILED BY THE ASSESSEE BEFORE THE FAA THAT WERE REMANDED TO HIS OFFICE AND ON THE OTHER HAND NOW HE IS CHALL ENGING THE APPELLATE ORDER ARGUING THAT HER ORDER WAS NOT JUSTIFIABLE. IT APPE ARS THAT THE COMMISSIONER OF INCOME TAX, WHO HAS AUTHORISED THE AO TO FILE THE A PPEAL HAS CONVENIENTLY IGNORED THE FACT THAT THE AO HAD NOT SUBMITTED THE REMAND R EPORT IN SPITE OF GETTING SUFFICIENT TIME TO DO SO.WE FIND THAT THE FAA HAD M ADE CERTAIN ENQUIRIES AND AFTER THAT TOOK AN INFORMED DECISION. IN OUR OPINION, HER DECISION DOES NOT SUFFER FROM ANY LEGAL INFIRMITY. THEREFORE, CONFIRMING THE SAME , WE DECIDE THE EFFECTIVE GROUND OF APPEAL AGAINST THE AO. ITA NOS.5532/M/14-WINE SOC.OF INDIA 5 AS A RESULT,APPEAL FILED BY THE AO STANDS DISMISSED . . ORDER PRONOUNCED IN THE OPEN COU RT ON 17 TH AUGUST, 2016. SD/- SD/- ( / RAMLAL NEGI) ( / RAJENDRA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 17.08.2016. JV.SR.PS. / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR G BENCH, ITAT, MUMBAI / , , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, MUMBAI.